Forex Technical Analysis and Generating Forex Trading Signals

Consolidation - Bollinger Squeeze

Bollinger Bandwidth is used to identify the squeeze, which is a consolidation period of price, after which the price then breaks out in a particular direction.

Signals are generated when there is a price breakout signal is generated by the indicator starting to go up after touching the red line. When the bandwidth line starts to move up it signifies that volatility is rising as the price is breaking out.

Squeeze

Breakout Signal After Bandwidth Squeeze

However, this is a directionless indicator and needs to be combined with another indicator such as the moving average to determine the direction of the trend/ Breakout.